Blockchain in action: stabilising the grid in Germany and the Netherlands

Case study: Blockchain technology is being put to the test in northern Europe, writes Jean-Baptiste Cornefert of Sonnen.

A quick view into the future: it is the year 2030 and Paul, a homeowner with his own photovoltaic system and battery storage, checks his electricity bill. His neighbour Sam got 12kWh of solar power from Paul’s house roof today. Amanda, the elderly lady a few blocks away, has consumed 5kWh of solar power from Paul. Both charges Paul sees on his online portal. The transactions are registered with a blockchain and the compensation is immediately credited to Paul’s bank account.

Those energy transactions happen thousands of times every second, and are continuously and consistently registered on a myriad of single computers around the world with a blockchain. A blockchain is a database that is organised decentrally. A main server that stores all operations is no longer needed. All distributed computers store the information that Sam got 12kWh of solar power from Paul. After a certain time, all accumulated information is then combined into a block and provided with a kind of checksum. This checksum is then included in the data of the next block. This makes the blockchain very secure against subsequent manipulation. If an individual transaction is subsequently modified on a computer, this is immediately noticeable because a whole chain of checksums is no longer correct.

For the energy supply of the future, the blockchain is the key technology. It digitally links up millions of decentralised generators of clean energy and documents their output, even at the smallest level between Paul’s PV system and his neighbour Sam. Finally, Paul produces and consumes his electricity himself and sells the surplus energy that he does not need himself. Miles of transmission networks that transport electricity over long distances are needed in a much lower scale.

Electricity is more and more being produced in decentralised and climate friendly ways. Instead of individual large power plants, energy is generated where it is being consumed: for example on private houses with photovoltaic systems. Of course, there are also wind turbines, on land and at sea, hydroelectric power plants and biogas plants. All contribute to the sustainable electricity mix that supplies society, industry and consumers.

This decentralised generation has a positive effect on our energy system in many ways. Electricity is produced and consumed directly or stored in batteries for later use. As a result, the necessary basic supply in the power grid is drastically reduced, which in turn means only a few central power plants are needed.

Nevertheless, the switch to renewable energy also has its own challenges.

A nuclear or coal-fired power plant can theoretically deliver constant power around the clock. Wind and solar power, on the other hand, are influenced by external circumstances. If there is a lot of sun, the share of solar power is correspondingly high. At night, this will disappear completely. Wind energy depends on the weather. This wind is sometimes constant, sometimes it fades and in a storm, a lot of electricity is produced.

Such fluctuations are referred to in the jargon as volatility. The energy transition, and thus the change to a decentralised supply, is still a few years away.

But the more renewable energy is integrated into the electricity mix today, the greater the need for solutions, so-called grid services, for this new form of electricity production.

What does a grid service via blockchain look like? Imagine a windy day over the North Sea that makes the wind turbines in the area rotate heavily and produce large amounts of electricity. Now there are two problems: the power consumption in northern Germany is not high enough to take all that electricity.

Secondly, the power lines to southern Germany or other parts of Europe are not strong enough to transport that huge excess of energy. To bridge that bottleneck the grid operators have to act with the so-called ‘redispatch’. Usually they turn off the wind turbines in the north and activate gas or coal fired plants in the south for keeping the balance.

The pilot project with TenneT and sonnen has found a new approach. If too much wind energy is produced in the north it is stored in the virtual connected battery storage systems in that region. At the same time, decentralised storage systems in the south discharge energy into the grid, compensating for the lack of energy from the north. So the bottleneck is bypassed via a virtual power line that is, by the way, the first green solution for redispatch.

The amount of energy each individual decentralised battery has charged or discharged is registered and stored by a blockchain. The process starts automatically within seconds, no phone calls between grid operator and power plants have to be made. The collected information is encrypted and stored on thousands of computers. Every participating party, such as storage providers or grid operators, has full access to all data, making it very transparent.

sonnen is providing its virtual battery pool that can deliver exact forecasts how much energy will be available in a certain region and within a certain time.

For the grid and society, this form of redispatch has significant advantages.

On the one hand, the decentralised storage units are already available to homeowners and serve as a battery for their own energy supply. In addition, all people benefit. Less wind energy has to be wasted and the costs for grid operations like the redispatch can be reduced significantly.

In addition to their own, clean and free electricity production, the individual owners of the storage are looking forward to additional revenue they can obtain by participating in those scenarios.